National Association of Home Builders Discusses Economics and Housing Policy

Multifamily Starts Indicate Sustained Recovery

The Census Bureau’s preliminary estimate for starts in buildings with five or more units in January came in at 175,000 (at a seasonally adjusted annual rate)—up 14 percent from the revised rate for December. About half of January’s increase was due to a 7 percent downward revision to the starts rate for December.

Due in part to the influence of large structures, the monthly five-plus starts series has always been somewhat volatile. The 3-month moving average for five-plus starts was 188,000 in both December and January, and has been fairly consistent and above 180,000 for five straight months now. Most insiders will view this as a positive sign of a sustained recovery, given the historic low point from which the industry is struggling to recover.

The Census Bureau’s preliminary estimate of total five-plus starts in 2011 is 167,000, which would be up 60 percent from 2010.

Meanwhile, the seasonally adjusted rate at which new five-plus permits were issued in January was 208,000—little changed from December and high enough to suggest that the recovery in five-plus starts is sustainable. During a 3-year period that began in November 2008, the five-plus permit rate remained below 200,000 (and sometimes even dipped below 100,000), but has now been above 200,000 for three consecutive months.

I hardly see how the building of apartments to accodate millions of Americans unable to buy a home while affordability is at an all time high a sign of recovery. I see it as evidence that we are not looking at the light at the end of the tunnel but the lights of a train coming right at us.

[…] the growing absorption rates are a good sign given the increased rate of multifamily 5+ starts, which in turn will lead to higher multifamily completions during 2012 and 2013. The SOMA data are […]